Foreclosure crisis makes Detroit a city of renters, not homeowners

Judyann Simpson, 6, left, and her cousin Alontae Bailey, 8 play outside the home her family has been renting for the past 3 years in the Brightmoor neighborhood in Detroit on Friday, March 10, 2017. Angela Simpson, 28 is planning on buying a home this year but is cautious about the process. "I am looking longterm, I am trying to own my home but I don't want to be one of the ones who thought they owned a home and they didn't. They are a lot of scams out there," says Simpson.(Photo: Romain Blanquart, Detroit Free Press)

DETROIT — For the first time in half a century, renters now outnumber homeowners in Detroit.

The surge in downtown and Midtown apartment living is just a tiny part of the reason for the shift. By far the bigger reason: The foreclosure crisis of the past 10 years has seen tens of thousands of single-family houses in Detroit shift from owner-occupied to renter-occupied.

Many of those renters are living below the poverty line, unable to afford basic maintenance on their dwellings. The Detroit Future City Implementation Office is among those raising an alarm about what the trend means for the well-being of many Detroit residents.

“I think the message that we want to give is that it doesn’t have to mean that Detroit is on a downward spiral because there are more renters than there are homeowners," said Anika Goss Foster, director of the office. "But it does mean that we need to pay more attention to this market. Because not only are there more renters, there are low-income renters living in poor-quality housing and that’s really what we need to be concerned about."

As of 2015, the latest Census estimates available, about 53% of Detroiters were renters, not owners. Exactly when renters became the majority is not clear — just sometime in the past few years. The issue began to percolate earlier this month with a report by Detroit Future City.

Decades ago, Detroit was renowned as a place where working-class folks could own their home. Black residents enjoyed some of the highest homeownership rates in the nation. But the Great Recession and collapse of the housing market almost 10 years ago saw more than 100,000 Detroit homeowners fall into foreclosure.

This map provided by the Detroit Future City Implementation Office shows the increase in rental housing in Detroit. The dark brown ares on the perimeter of the city show where single-family homes have switched in recent years from owner-occupied to rental. The yellow areas show where rental units have declined due to population loss.(Photo: Detroit Future City Implementation Office)

Today, Goss-Foster estimates, that there are 130,000 single-family houses that are rented instead of owner-occupied in the city. But only about one in five of those receives any sort of subsidy under a variety of federal or state housing programs.

A map offered by Goss-Foster's office shows an increase in rental housing around the perimeter of the city, including many areas such as northwest Detroit that were once havens of homeownership. Much of the inner core of Detroit just outside the greater downtown shows a reduction in the amount of renters, reflecting the loss of occupied housing in general because of population declines from 2000 to today.

The net result: Over the past few years renters began to predominate. The flip to a majority-renter city was captured in the Census Bureau's most recent American Community Survey.

"A lot of this is a result of the foreclosure crisis," Goss-Foster said. "That really changed the dynamic. Both the number of renters and the number of vacant houses has increased."

Anika Goss-Foster is the executive director of the Detroit Future City Implementation Office.(Photo: Detroit Future City Implementati)

The Detroit Future City Implementation Office, the nonprofit entity that tries to advance the greening and economic development principles found in the 2013 Detroit Future City framework, has taken on this issue as part of its focus on land use.

There are many ways to interpret the data. One way is to see proof of the often-heard point that Detroit neighborhoods continue to struggle even as the greater downtown thrives with new housing, retail, restaurants, and exciting new developments. Certainly the sharp increase in renters at the expense of homeownership testifies to the shaky financial status of thousands of Detroit families.

The map and data also underscore the importance of programs to help renters, landlords and property managers maintain their properties and build wealth. So far, though, government programs aimed at assisting low-income residents target either multi-family apartment buildings or mortgage loans for home buyers. Detroit's switch from single-family, owner-occupied homes to renter-occupied houses is so new that assistance programs haven't caught up yet.

Wendy Lewis Jackson, who manages the Kresge Foundation’s Detroit revitalization programs, said the switch to a majority-rental market creates a need for new ways of thinking about the city.

“I think there’s an opportunity because many families with young children have moved into these homes," she said, "and so now how do we as a city put the right supports around the rental market to ensure stability?”

There are many ways to attack the problem.

One track is to create better landlords. The nonprofit Center for Community Progress, based in Washington, D.C., works with Detroit and other cities to develop programs to make landlords more responsible. The city of Milwaukee offers a free training program to landlords on how to be a “proactive property manager,” including code compliance, applicant screening and how to recognize and deal with drug and other illegal activity.

Detroit is also trying to make mortgage loans more available to potential buyers. Low appraisals and poor credit scores are among the reasons Detroit sees a relative handful of market-rate mortgages written each year. Lenders such as Quicken Loans, JPMorgan Chase and Huntington Bank have been working on programs to make mortgages more available in the city.

Homes on Bramell street in the Brightmoor neighborhood in Detroit on Friday, March 10, 2017.(Photo: Romain Blanquart, Detroit Free Press)

At the same time, the Detroit Land Bank Authority had auctioned off 1,400 tax-foreclosed houses by the end of 2016 in a move to boost homeownership. More than 1,000 of those sales had closed by year-end.

And Goss-Foster and others recommend a coordinated approach that might include everything from reduced fees for permits for landlords to upgrade their properties to insurance discounts for new homeowners.

Renters, of course, may have many valid reasons for renting instead of buying. But homeownership for generations has led to wealth accumulation for American families. A forced conversion from ownership status to renter status signals that many thousands of families are no longer slowly building up their assets.

Much of the housing in question was built between 1930 and 1950 and is in need of upgrades. And while rents may be cheaper in many Detroit neighborhoods than in, say, Oakland County, they can be high relative to the income levels of families paying 30% to 50% of their income on housing.

“This is poor-quality expensive housing that people can’t afford to maintain or live in," Goss-Foster said. "It’s a really big problem.”

And it's a growing problem for Detroit. If we want to turn the economic tide in Detroit's neighborhoods, it's a problem that demands more attention.